‎Canada’s auto industry will get just three to five years to adjust to the end of tariffs on South Korean imports under a free trade deal Prime Minister Stephen Harper was set to announce early Tuesday.

The auto industry was among the most contentious in a broader trade deal the federal government says will benefit most sectors of the Canadian economy by eliminating tariffs on virtually all exports to the emerging Asian economic powerhouse.

“The Canada Free Trade Agreement will create jobs and opportunities for Canadians across the country. Not only will it benefit Canadian consumers, it is good news for farmers, the aerospace industry and the chemicals sector, to name a few,” Harper said in a statement issued late Monday in advance of Tuesday’s official announcement.

‎The deal has been widely endorsed by Canadian industry leaders, from beef and pork producers, to wine makers and grain growers.

But the auto sector remains a concern, said Jayson Myers, president and chief executive officer of the Canadian Manufacturers and Exporters.

The three-year phase-out of Canada’s tariffs on South Korean cars is “quite aggressive,” Myers said. Canada imported 124,000 cars from South Korea while exporting just over 2,000 vehicles to that market last year.

Ford of Canada, one of the deal’s most outspoken opponents, said in a statement, “South Korea will remain one of the most closed automotive markets in the world under the deal negotiated by the Canadian government.”

South Korea has used non-tariff barriers and currency manipulation to protect its home market, and nothing in this pact will change that, Ford said.

Free trade with South Korea is an unneeded challenge for Canada's auto sector just as it is getting back on solid footing, Canada’s largest private-sector union said.

“We cannot stand by a deal that allows Korean car makers to flood Canada, while doing little or nothing to get our cars into Korea,” Unifor national president Jerry Dias said just hours before details of the deal were released.

“If Korean companies want to sell more in Canada, they should be required to make those cars here.”

Overall, the free-trade deal — Canada’s first with an Asian country — is important in that it sets the tone for future trade negotiations with the rest of the region, Myers said.

The expedited dispute resolution mechanism in the Canadian deal is better than what the U.S. got in its trade deal with South Korea, Myers noted. The Canadian pact is expected to boost exports to South Korea by one-third, or $1.7 billion a year, once it’s fully implemented, according to government documents.

Ottawa didn’t project the impact on South Korean exports to Canada. Canada currently has a trade deficit with South Korea of $3.9 billion. Most of that is in the auto sector, along with machinery and equipment.

The deal must still be put into legal text, which could take several months, and then ratified by the parliaments of both countries. No timetable was given. But Ottawa is anxious to push it through, an official said.

That’s because Canada has been losing ground since other countries signed similar deals with South Korea, including the United States and the European Union, the government said.

‎Ottawa estimates Canada’s exports to South Korea have fallen by $1.5 billion since the U.S. deal came into effect in March 2012.

Canada’s agriculture and food industries — particularly beef and pork producers — are among the big winners in the pact with South Korea.

“This agreement is a major win for Canada's agri-food industry,” said Michael McCain, president and chief executive officer of Maple Leaf Foods, a major pork producer. “It restores a level playing field and unlocks strong growth opportunities in an affluent Korean market for high-quality Canadian pork and other agri-food exports. We strongly encourage the government to implement it promptly.”

Canada’s rye whiskey makers said they’re delighted with the deal. The industry lost 50 per cent of its exports to South Korea within a year of the U.S. free trade deal coming into effect, said Jan Westcott, president and chief executive officer of Spirits Canada.

The Canadian pact will eliminate a 20 per cent tariff on whiskey exported to South Korea.

The deal also recognizes rye whiskey as a distinct geographic product, Westcott said, making it tougher for knock-offs to enter the market.

“We’re very pleased with the deal,” Westcott said.

On autos, the Canadian government said the deal would give Canadian automakers faster tariff-free access to the South Korean market than either the U.S. or Europeans got.

South Korea will eliminate its 8 per cent tariff on Canadian auto imports as soon as the deal is implemented, while Canada will phase out its 6.1 per cent tariff on South Korean cars more gradually, in three annual cuts.

The deal also provides for a swift dispute resolution process if South Korea‎ uses safety or emission standards or other non-tariff barriers to keep Canadian-made cars out of their market.

‎Detroit-based auto makers have opposed the Canadian trade deal, saying the U.S. pact has hurt their exports to South Korea.

The deal has been nine years in the making and was stalled partly by South Korea’s ban on Canadian beef, due to concerns over bovine spongiform encephalopathy. The ban was lifted in 2012.

South Korea’s tariffs on beef range from 40 to 70 per cent.

Prior to the ban, Canada had been the fourth largest supplier to the South Korean beef market.

Some 30 industry associations released a letter last month urging the Prime Minister to sign the deal, saying Canada’s exports to South Korea fell an estimated 30 per cent, or $1.5 billion, in 2012, the first year the U.S. agreement was in effect.

South Korea is Canada’s seventh largest merchandise trading partner and its third largest in Asia, after China and Japan.

Trade between Canada and South Korea reached $10.1 billion in 2012, according to Industry Canada.

Canada imported $6.3 billion worth of goods from South Korea that year, almost twice as much as it exported, at $3.7 billion.

Canada’s top exports to South Korea include oil and gas, wood pulp, mineral ores and meat.

Canada’s top imports from South Korea include cars, electronics and machinery, electrical and electronic equipment, and machinery.

Trade between Canada and South Korea

South Korea’s economy:

Population: 50 million

GDP: $1.13 trillion U.S.

Canada’s economy:

Population: $35 million

GDP: $1.8 trillion U.S.

Canadian trade with South Korea:

* Main Canadian exports to South Korea: Oil & gas, machinery, equipment

* Value of exports: $3.7 billion

* Main Canadian imports from South Korea: Cars, electronics, machinery

* Value of imports: $6.4 billion (CDN)

Export Development Canada, Industry Canada

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